Cape Lambert tips board coup bid to fail

Tag : iron ore

Cape Lambert Iron Ore Ltd believes a bid by its second largestshareholder, Power United Ltd, to oust the iron ore explorer'sincumbent board will fail.
Power United has called an October 15 shareholder meeting to try toremove Cape Lambert's board, including executive chairman TonySage, so it can review, and then put to shareholders, acontroversial project in Sierra Leone.
Perth-headquartered Cape Lambert on Wednesday night finalised thefirst stage of a $US200 million ($US254.3 million) acquisition ofAfrican Minerals Ltd subsidiary Marampa Iron Ore Ltd, owner of anamesake project in the West African nation.
But Mick Shemesian's Power United, which has an 11.49 per centstake in Cape Lambert, says the deal should have been subject toshareholders first.
This was because it was potentially company transforming,effectively moving Cape Lambert's focus offshore.
Dubai-based Mr Shemesian last month dropped a court action to blockthe Marampa acquisition.
But his company said it had lost faith in Cape Lambert's managementand the only way to prevent the Marampa deal progressing withoutshareholder approval was to remove the incumbent board.
Mr Shemesian wants his own nominees appointed, including Perthlawyer Martin Bennett and Melbourne investor Leo Khouri.
Power United says the Marampa acquisition was made without adequatedue diligence and without establishing the value of the project.
One of Power United's nominees, Tony Roberts, told AAP it wouldrequire a lot of cash to prove up the project's iron ore resourceand the security of the lease holding was contentious.
It made more sense for Cape Lambert to invest its significant cashreserves in worthy, advanced, low sovereign risk projects inAustralia, he said.
"We should not rush headlong into investing in the Marampa projectpending due diligence, a proper assessment of its potential and thelease question on the old tailings area is resolved," Mr Robertssaid.
"The ordinary shareholders should vote on this, particularly inview of such an enormous amount of money going out, which isleaving Australia."
He did not agree with the $200 million valuation, describing theproject as effectively "undrilled" because it did not contain aresource that complied with Australia's mineral reporting standard.
However, Mr Sage told AAP that Cape Lambert had investigated theproject for 12 months.
He said Power United's stance was "very puzzling" because they hadbeen extensively consulted regarding the acquisition, ultimatelydeeming it "good and fair".
"They agreed and approved the deal, and (then) withdrew theirinjunction," Mr Sage said.
"They should have kept on with the injunction and we wouldn't havebeen able to do the transaction (if they were against the deal)".
"I just can't understand it.
"They won't win the vote."
Russian steel maker Evraz, which holds a 16.5 per cent interest,was initially opposed to the acquisition but now fully endorsed thedeal, Mr Sage said.
Evraz had planned to make a bid for the project if Cape Lambert didnot.
Shareholder support so far had been "enormous", he said.
London-listed African Minerals will receive a roughly nine per centstake in Cape Lambert as consideration of the deal.
African Minerals is controlled by Romanian-Australian resourcesentrepreneur Frank Timis, who is connected with failed fueladditive developer Firepower.
Shares in Cape Lambert jumped 10.5 cents, or 29.58 per cent, to 46cents.
© 2008 AAP
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